Fit-for-Life Foods reports the following income statement accounts for the year ended December 31. $ 6,250 Depreciation expense-Office copier 700 Sales discounts Gain on sale of equipment Office supplies expense Insurance expense Sales $ 500 16,000 4,000 2,000 1,300 Sales returns and allowances Office salaries expense Rent expense-Selling space Sales salaries expense 750 90,000 13,000 Prepare a multiple-step income statement. 220,000 TV advertising expense 32,500 Interest revenue 10,000 Cost of goods sold 23,000 Sales commission expense
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Having trouble completeing this multi-step income statment
![Sales
Less: Sales discounts
Less: Sales returns and allowances
Net sales
Cost of goods sold
Gross profit
Expenses
Selling expenses
FIT-FOR-LIFE FOODS
Income Statement
For Year Ended December 31
Sales salaries expense
Rent expense-Selling space
TV advertising expense
Sales commission expense
Total selling expenses
General and administrative expenses
Depreciation expense-Office copier
Office salaries expense
Insurance expense
Office supplies expense
Total general and administrative expenses
Total expenses
Income from operations
Other revenues, gains, expenses & losses
Interest revenue
Gain on sale of equipment
Total other revenues, gains, expenses & losses
Net income
$
16,000
4,000
23,000
10,000
2,000
13,000
500
32,500
1,300
700
750
6,250
$
220,000
20,000
200,000
90,000
110,000
48,000
35,000
83,000
27,000
7,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe18c4c3e-fff6-4ff0-8265-a5151c1bba12%2Faa8633dd-1fc4-4220-bce9-080159fcf76d%2Fzc04far_processed.jpeg&w=3840&q=75)
![Fit-for-Life Foods reports the following income statement accounts for the year ended December 31.
Gain on sale of equipment
Office supplies expense
$ 500
16,000
4,000
Insurance expense
Sales
2,000
750
Office salaries expense
Rent expense-Selling space
Sales salaries expense
Prepare a multiple-step income statement.
$ 6,250 Depreciation expense-Office copier
700 Sales discounts
1,300 Sales returns and allowances
220,000 TV advertising expense
32,500 Interest revenue
10,000 Cost of goods sold
23,000 Sales commission expense
90,000
13,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe18c4c3e-fff6-4ff0-8265-a5151c1bba12%2Faa8633dd-1fc4-4220-bce9-080159fcf76d%2F620c7f5_processed.jpeg&w=3840&q=75)
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